Phoney Baloney
By Cybele Weisser

(MONEY Magazine) – Looked closely at your phone bill lately? If so, you'll find more padding than in a Victoria's Secret Miracle Bra. Research firm TNS Telecoms says taxes and fees now make up a quarter of the average consumer's wire-line bill--a 17% rise from 2001. Worse, this doesn't include a range of official-sounding fees that are merely dreamed up by phone companies to boost profits while they advertise their 5¢-per-minute long-distance rates.

Consider AT&T's latest: a 40% hike in its "bill statement fee" (from $1.50 to $2.49 a month as of March 1). Uh, what the heck is a bill statement fee? Turns out, it's an extra charge for AT&T users who get billed for AT&T long distance on their local phone bill from a different carrier. AT&T tells us the fee is "an encouragement to receive a bill directly from us so we can communicate with our customers." Translation: If we can't send you our own junk mail, then by golly we're going to charge you an extra $30 a year.

Some fees, such as MCI's "carrier cost recovery charge," sure sound like they're required by the government, but they're not. (An MCI rep says that its carrier cost recovery charge "helps us recoup the costs of doing business.") Others, such as the ubiquitous universal service fee and the federal excise tax, are indeed government-mandated, but the feds don't require phone companies to directly charge them to customers. "When you shop for a car," argues Pennsylvania consumer advocate Sonny Popowsky, "the car companies don't tack on a 'tax' that covers the cost of their meeting the Clean Air Act."

What can a consumer do about all this fee-mongering? Not much--so long as the federal government permits the practice. Here's hoping someone in Washington, D.C. is listening. --CYBELE WEISSER